Generali may scrap German life book to fund expansion

Generali is open to selling its EUR40 billion (USD47 billion) German life insurance portfolio to free up capital to accelerate growth in its second-biggest market, the company said.

Generali has stated that it would be gradually winding down its Generali Leben life business from the first quarter next year in a “run-off” process, which means it will honour existing policies but not issue new ones.

Insurers are struggling to pay guaranteed returns because of record-low interest rates and European capital rules have become more stringent for some life policies, prompting some companies to consider selling their life insurance portfolios, according to a Reuters report.

Generali said a sale would boost its economic solvency ratio, a measure of financial strength, by 1.7 percentage points and by 26 percentage points in Germany, where it is the second largest insurer by premium income.

As part of a reorganisation, Generali also said it had sealed an agreement with German financial adviser DVAG to distribute its products exclusively in the country.